tv Bloomberg Markets Americas Bloomberg August 17, 2017 2:00pm-3:30pm EDT
next're live over the hour. here of the top stories we're covering on the bloomberg and around the world. latest on the attack in barcelona leaves one person dead and others injured after a van mode into a crowd. we will bring you details as we get them. damningnnon could beast -- could be standing the trade plan. an economic war with china. we will hear from the former chairman. keeping up with amazon is costing walmart a pretty penny. shares plunging today after it reported disappointing second-quarter results. we begin with barcelona where a band plowed into pedestrians and an iconic
tourist spot. images show scenes of chaos. please close off the center of barcelona and told people to stay home. with ourthe phone reporter from madrid. officials are trying to piece together what happened. what can you tell us? >> we are getting mixed messages. what has been officially said is there is one person dead and about 30 have been injured. a lot of reports are coming out that the number could be closer to 13. what happened if there is a promenade that runs from the beach. it is a key place for tourists so it is crowded 24/7. is ais summertime so it peak tourist season. the van went straight at people, hit and killed a few, and at least two people escaped.
there is a report that one has two arrested and one or others are in a restaurant nearby and maybe negotiating with police. arelet: police in spain calling this a terror attack. our people -- are people claiming responsibility? rodrigo: we don't have confirmation of that. the spanish government is careful with the word terrorist because of their history with terrorism. when they come out and say it is probably because they feel very confident this is the case. we haven't heard from anybody who may be claiming it to be the case. now, it is evening in barcelona. what is the status of the city center? have people still been told they cannot come back in? d up inple still hole
the building or offices because they are afraid to go home? evening if they runs later than in the u.s.. people -- in the u.s. people will go to dinner at around 9:00. a lot of the shops and stores have closed and they are not open in the area. people can walk around parts of the areas, but traffic has been cut off, as well. that has not been opened yet. the president of the u.s. tweeted condemnation of the attack. l do whatever is necessary to help." whether any safety precautions the taken in other parts of spain, madrid for instance? rodrigo: the police have these alerts. we are on a high level alerts. high-level alert.
there is nothing major at a nationwide level, but they put on their alerts. thank you so much. let us turn to the markets as we are under two hours from the close of trading in the u.s. lor: i would mention we are still continuing this risk off the field -- feel. 500 is down about 1%. we're covering the lows of the session since the reports are out in barcelona. no additional reaction to that. holding steady, down 1%. the dow jones transportation index is down almost 2% here. looking out all the major averages here slightly in the red, down near their lowest of the session. feeling that is perhaps some of the risk off trade and bond
yields are heading lower. down two basis points to about 2.21%. i would note to bring this in that surveillance confirms a call for a 1.9% here on the 10-year heading in for the rest of the year. with that to quality, you sometimes see a selloff in the financial, as they can be a bit correlated to the yields. i will point out bank of america, the worst performer in the s&p 500 financial sector. down about 1.5%. we have been touching on the retail sector today and earnings. i will highlight alibaba, that came out with earnings this morning continuing to show their dominance over the chinese consumer, with the revenue jumping 6.6% and profit almost doubling.
increasedtive users to 530 million. analysts feel pretty good about the alibaba stock today, up 3.5%. julie: we will talk more about walmart later in the show. it has been the summer of tranquility for the $14 trillion treasury market despite the uncertainty around military monitary -- monetary policy. if you look at the bloomberg here, you can see it is about the most tribal. -- tranquil. tranquilk to 1990 -- period going back to 1990. only once in the past 27 years didn't yield traded in a
persistently tighter range. joining us is the senior poll for leo manager -- senior portfolio manager. she is joining us from our offices in pennsylvania. >> thank you for having me. julie: it is interesting that we have seen the tightness of this range, given the events we are seeing today in barcelona in barcelona and the geopolitical environment, and given we are seeing the odds for the next rate hike getting pushed further out. why have we not seen yields lower than they are right now? reat think there is a g deal of uncertainty. the markets appeared to be awaiting more information. much like the central bank statements we saw yesterday from today. and the ecb the markets are trying to digest the slow growth, low inflation
environment. while they're waiting, we get stuck in the field range. scarlet: that is a consensus view right now. this uncertainty. you are pretty clear, you believe inflation will come and te may be10-year ra pessimistic uruguay is the bond market wrong? gemma: we really like to put it the global context. if you think about where global growth has come from in the last 18 months, we have had a synchronized global growth story. we have been global inflation and as aslowly concern for policymakers, but still at an upward trend. becky to optimistic because we see it expanding into 2018. that expansion has been going on, but we have not seen inflation yet. when you see is the biggest
factors holding it back that might dissipate? there are transitory factors that might have been holding it back in the u.s. this year and the fed has highlighted them. someare technology, dampening of consumer prices earlier in the year after china and the west raised interest rates. we think that is behind us. we see growth accelerating into the second half of the year a little bit above 2%. we think the underlying trend in prices,n -- rent, home and wages -- will continue to accelerate into it 2018. is the global backdrop dissipating. from the segue economic backdrop for a moment and toward the policy, i want to ask about gary cohn. earlier today we saw a blip in the equity market and in the treasury market when there were
reports he might be leaving the white house. he isite house said, no, not leaving his position as head of the economic council. how important do you think his position is to the markets and to getting president trump's tax reform and economic agenda satisfied? gemma: i think there are two points to take out of the headlines and the rumors. one is it tells you the market is focused in on who the next fed chair may be. the trump administration will have an opportunity to populate almost the entire board within the next year and fill vacancies that will be there and potentially replace the chair. the market wants to know. we are getting to the deadline and the congressional calendar where it becomes important for the markets. the second is i think the market has low expectations on fiscal policy.
the market is always looking for some kind of clarity to break us out of this interest rate range and to be able to have a forward-looking view. the changes in fiscal policy may mean economic activity. the jitters are around the headlines and they tell us the market is seeking more information. everyone is trying to figure out who will be the fed chair. cohn is said- gary to be one of the leading candidates. there were tweets about how is janet yellen were to be asked she should not be because the request is being made by this particular president. do you think the job of the chief is a political appointment? gemma: the fed chair is always politically appointed and approved by the senate. in the end, i think what you see out of aair -- seek
chair is someone who continues the policies of the institution. the next fed chair, whoever it may be, should continue on with it so it eases the burden of any kind of transition. i think the markets are looking for clarity. we're looking for the fed's announcement and economic data to give us that forward path of interest rates over the next 18 months. scarlet: thank you for joining us. let us get your check on bloomberg's first word news. reportolice in barcelona that no one is at large in any bar after the van mode down passengers in the historic district. police confirmed one person has been arrested. theident trump condemns
deadly van attack in barcelona. rex tillerson offered his condolences to the victims of says arek, which he the hallmarks of another terrorist attack. he added, terrorists around the world should know the united states and our allies are resolved to find you and bring you to justice. the white house says it is working to find a convenient time for the president to speak with the family of the 32-year-old woman who was killed while protesting that white nationalists rally last month -- last weekend, excuse me. a spokeswoman says the white house appreciate the unifying words of heather heyer's mother. she did not address the press -- the question if the president would visit charlottesville. "the largest,
humanitarian crisis in the world." there are now more than 20 million people in the country in need of assistance to meet basic needs such as health, water, sanitation, and food, according to the u.n. thousands andlled displaced 3 million people. nobel laureate has been accepted at the university of oxford. the 20-year-old activist shared word of acceptance to the school on twitter. she plans to triple major and in won international acclaim 2012 after she was shot in pakistan for speaking out for the rights of girls to go to school. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg.
bannon said, to me the economic war with china is everything. we will be focused on that. we are 10 years at most from hitting an inflection point for which we can never recover. joining us is the chair of the national committee of united states-china relations. i want to get your take on steve bannon's quotes. was there some truth in it? >> you are probably having reference to the executive order that directed the u.s. trade representative to tradento china's practices toward intellectual property. you think he is making a specific reference to that. he also talked about filing complaints about the 1974 trade act.
we have talked in the past about the wisdom of doing that versus filing complaints through the wto. carla: they are not mutually exclusive. does his301 statute job right and investigation. we don't know how it will turn out. i continue many u.s. companies have complained about china's failure to enforce its intellectual property laws or the to the conditions on it. i can tell you our homeland security has said a majority of the counterfeiting goods that come into our country come from china. but that is just not what i call an investigation. this investigation could take nine months, 10 months, a full year. if the u.s. trade representative finds there is a basis for taking action, he can bring if there are wto
no rules he feels are applicable. he can take action unilaterally. we just don't know yet. scarlet: there was a response from china to mr. bannon's comment saying, there is no winner and a trade war. carla: we have used 301 rarely in the past, but we have, we came to a resolution that was pleasing to the united states by consultation and negotiation. i think it is premature by a longshot to say that we are going to bring an action. what we are going to do is look at the facts. speaking of ongoing negotiation, i want to get to the topic of nafta since you were involved in the original
negotiation of that agreement. what mistakes do think my have been made in the nafta deal and what do you think can now be improved upon? carla: i don't see mistakes and what was negotiated. let me say we eliminated industrial tariffs between the three countries. up agricultural market between the u.s. and mexico. we opened up the services market, the investment market and had a good the them of intellectual property protection resolvinganism for disputes. i am in favor of further negotiations. that is because our economy is now in the 21st century, and we negotiated rule that were covering -- work governing a century economy. we did have access for
audiovisual services. we did have intellectual property that covered digital data. we do have rules governing a whole host of things that now we need and should have. so i applaud the upgrade, but that doesn't mean that the foeement was not a real, ward-looking agreement at the time. let me tell you we negotiated that agreement in 14 months. uruguay round collapsed in 1991 with an four months of the north american free trade agreement taking effect in 1994. all the ministers were back at the table and finished the uruguay round and created the wto. why?
when the initial headlines crossed of what now seems to be we have beenttack, stocks initially fall off and then they subsequently are now making new lows. some of the worst performers include airline stocks. american airlines is down by 5%. delta down by nearly 4%. we are seeing pressure on these international travel stocks. the nasdaq is down the worst of the three major averages, with the decline of 1.4%. only the worst decline since last thursday, when we saw that selloff. we will have much more on this coming up.
starting for the third straight session. global supply drives prices lower for week. oil has been rising today, but it is trading near its lowest in rude hoveringc around $47 a barrel. we also had data on a saudi production. strugglestay -- will to stay above $65 a barrel. ld is notable today. catching a bid after the attack in barcelona. over the two days, it is up by nearly 1%. we had a little bit of lift for gold after the fed minutes yesterday. bullish.eyors are the longest run since march.
scarlet: walmart is reporting thatd-quarter reporting topped wall street estimates. shares are down the most after more than one month. is our us with more reporter who covers the consumer industries for us. grocerypushed its best sales and five years. but to sustain the kind of growth, it needs to spend a lot of money going forward. of -- there a lot is a lot of new competition coming into the space. it will be expanding to 400 stores. a german-based chain is coming to the u.s.. with all the new competition, it is a good sign for walmart that is coming into the fight with momentum. julie: especially the momentum with amazon and whole foods, but
it is unclear what challenge that will present. when we say walmart is spending a lot of money, what is it doing? is it a matter of keeping prices low? andow it is order online pick up in stores, and that is a big push it has done. how is it targeting these competitors? ofah: it is investing a lot money and its infrastructure network. they are allowing them to fulfill orders faster and give them the free shipping that make them more competitive with amazon prime. they're doing things like if you buy online and pick up and or, get a discount. that makes a more profitable purchase for them. they're experimenting with tactics like that to make their online business stronger. profit margins are a concern because of the spending, especially as walmart puts more emphasis on the e-commerce side.
the profit margins are more narrow than the brick-and-mortar sales. sarah: that is right. it seems like there's following a bitter pill as they make these investments. they are swalling a bitter pill. if you are examining this gross margin and see what walmart is doing right or wrong, it will be seen five years down the road. >> historically, they haven't not -- they have not been terribly patient with how one or is spending money. they are not patient with them today. the shares are down. how much patience do think they will have for the ten-year vision? sarah: you are right that they are not showing a lot of patience today because they did guidance for the full year. it was just the third-quarter guidance that wasn't where
analysts thought it would be. it does seem like investors do not have the patience for them that they do for amazon. i'm not sure that will change anytime soon and walmart starts showing some more longer-term progress. julie: thank you so much. let us check the headlines for the bloomberg first word news. mark: an official in barcelona says 13 people are now confirmed dead, and more than 50 others injured in the van attack. police force for the region says they arrested a man in the attack and are treating him as a terrorist. they announced the arrest on twitter. callingrior minister is on residents to remain indoors and avoid unnecessary travel while the investigation continues. president trump has condemned on twittertack saying, the united states will
do whatever is necessary to help. -- another series of tweets another series of tweets, president trumpin wrote about wrote, ith -- trump is sad to see the country getting ripped apart. was notsaid he approving racial tensions. issays that lindsey graham still bitter about losing to him in the primaries. settling a lawsuit regarding the program on terrorists. they filed a suit on behalf of three men detained following the 9/11 attacks. one died of hypothermia after being shackled to the floor. they administered an
experimental torture program. the united nations envoy for the beginning of a real negotiation on the syrian crisis could come in october. geneva, he said to you and is counting on russia, iran, and others to initiate genuine talks. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. coming up, alibaba shares are trading at an all-time high after the e-commerce giant reported better than estimated earnings and revenue growth. the sox may have more room to run. from new york, this is bloomberg. ♪
julie: this is bloomberg markets. scarlet: it is time for the sector spider report. we are focusing on industrial companies. oliver has the details. great day is not a for the industrial sector. this was a group that did well in the trump on after november. things so often. we're seeing things down around 0.9%. not helped by midday losses in airlines. i think there will be a little tying into concerns about trump's ties with business partners freighting -- frayiong. -- fraying.
i think this could be potentially problematic if no one wants to get on trump's side. let us look at the airlines. have all these companies doing poorly. they were already going down to start the day, but it didn't help when we had news of the incident in spain. airlines often times lose on days like this when terrorism starts floating around the news. there was another announcement in escalona where they -encourage- barcelona where -- in barcelona where they encouraged people not to travel. this is anals, interesting what i like because it was the actual best winner in the industrial group since the november election. hereu have one company that embodies the expectations for infrastructure from the white house, this is it. it is doing ok. it is on a pretty heavy volume. this is a company that rents out space and materials.
they also just had a deal where to expand their space. some positivity as they're able to withstand all the negativities coming within the rest of the history -- the rest of the industry today. and the kindompany of expand their position in the industry. what else are you watching in terms of financials? oliver: here is what i like. this is critical because what i can see is the profitability. they have pretty strong margins. look at the screen right here. 96th percentile in terms of their gross operating and trailing 12 months. the other thing i would point out is because the company has done well, you might think maybe it is overrun its true value. look on the valuation side, it is pretty low to how it compares to some of its peers. 25th percentile on a trailing 12 month earnings per share. i think there is space you were
investors are not quite as quick three julie wek. isie: another mover alibaba. they topped earnings and sales estimates. marketplacechinese rose 66% last quarter. vonnie spoke to the managing director. he has a buy rating on alibaba. they started by asking for his reaction to today's results. >> my one-word takeaway is affirmation. we have been looking at trends in the chinese consumption environment. alibaba's position is very strong. they have been seeing very notable improvements. combined with good volume growth and operating environments, the product of those is the result
we sold today. the affirmation is my initial take away. what about the cloud computing? because that's it below triple digit growth for the first time in several quarters. is that a concern to you? no. they are in a market development phase. i think the offset is the number of paying customer conditions was by far a record. objective is to win the land grab. they are doing that. they have had some aggressive pricing actions over the last couple of orders that deflate the top line growth. as long as they're successful in getting the early adopters on their cloud, they are positioned to win. harry and not doing so well is entertainment. area not doing so well is
entertainment. -- can they fix that? rob: they have tried to in the space. they acquired an entertainment business last year and really started to break it down and reform it and integrate it thoroughly throughout the alibaba ecosystem. it is a work in progress. they have been clear to position a matterround time as of years, not quarters or months. they are doing what they think they need to do in terms of growing audience. the advertising revenue has decelerated because they defocused that part of the business. view one a long-term the investments they make. vonnie: it is also putting money into brick and mortar stores.
it is recognizing the big retailers in the you have to have some kind of brick and mortar presence. more than 80% of purchases are done by hand. rob: unlike the amazon acquisition of whole foods, this is less about an infrastructure investment. amazon is clearly interested in whole foods for its space and affluent markets and the extension of their logistic infrastructure. alibaba's model is very different. i think their acquisition of in ame retail, this is more of large-scale experiment to understand how they can extend their value to the brick and mortar retailers. i do not envision the making a big asset play or further asset order tot in understand the complexity of the hybrid model off-line to online, owning it is probably a more strategic position to fully
learn how to do it properly. that was rob sanderson speaking earlier today. it is time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. a company agreed to buy an asian unit. it will pay $1.7 billion, mostly in cash. yunfeng is reaching out to regular investors to help manage money. the block chain revolution could for school to go digital. bitcoin isers for drawing investors. companies are rolling out similar platforms. about $27 billion in gold is trading each day. a federal lawsuit accuses
goldman sachs, jpmorgan, and for other banks of colluding to market.the $1 trillion loananks typically stocks to people looking to short sell. that is your business flash update. cisco's turnaround taking the spotlight. the ceo says the company has made good progress in reinventing itself. from new york, this is bloomberg. ♪
decline as it reinvents itself. the ceo talk about the progress and the company's makeover earlier today. >> we said we will shift more of our business to a subscription model, and we made unbelievable process. 31% of our revenues were from recurring, which was up four points from the prior year. we have our software deferred that grew 50% and eclipsed $5 billion for the first time. two quarters ago, i said it eclipsed $4 billion for the first time. that is moving rapidly. of our software business, 51% of our software business is from subscriptions. we have made a great deal of progress. i think the strategy we laid out is working. i am comfortable and pleased with what our team has accomplished. i am a long-term investor in
cisco. i believe in you. i want you to succeed. what are you telling me to look at to know i am certain it will turn around. what is on the dashboard to say, i know it is working or maybe it isn't working? >> we provided some new metrics that indicate this transition is working. metrics like this recurring of our, the size software business. if you look at our actual software business and use stack of against traditional companies, you might be surprised about how big it is. looking at the software balance and the percentage of our software, we provided a lot of metrics we are reporting now on a quarterly basis to help you feel better about it. at the same time, we are executing on our financial weels and last fiscal year,
had record cash flows, record earnings per share. we are executing on the financial side of it while we're going through this transition. >> many american ceos distanced themselves from the president of the united states after comments he made following ugly rallies. as you see it, is this an administration you can still work with? >> first of all, hello, jonathan. the events of this past weekend, it isand foremost, frankly incomprehensible we are in 2017 and having these discussions. i think most of america and abhors racism,y doesn't stand for it, doesn't stand for neo-nazis, white discrimination and any way, shape, or form. we communicated that clearly with our employees as we have gone through this great the
second thing is we still have a lot to do in this country. we still need to drive gdp growth. we have other regions of the world that are beginning to grow faster than we are here, which is great that they are growing, but we should be growing faster than the united states. we need job creation and tax reform. regardless of what is going on, we cannot advocate the need to get those things done. from a country perspective, we have to find a way, and our leaders have to find a way, to that more on the things unite this country. the things that have made us onat and not focus every day our differences of opinion and the things that divide us. i think that is what is most important. i think it is incumbent upon the business leaders to continue to the things the country needs to be successful and to make sure we are playing a role in making that happen. julie: that was chuck robbins.
total eclipse of the sun. parts of the u.s. will plunge into darkness and we will plunge into many puns as the solar eclipse ascends upon the country. oregonoing from sailing, to south carolina. homeowners are finding ways to cash in. joining us is olivia zaleski. she is not likely to have a great view of the of clicks neither are we here in new york city. it will be a partial eclipse. is seeing a surge in listing along the route of the eclipse. 50,000 people are expected to check into an airbnb, which is exciting -- or check into an airbnb on the path of totality, which is the 70
mile narrow strip. it is exciting for the company because 47% of these listings are brand-new users for airbnb. this is a unique opportunity an offense that has brought in a lot of people who wouldn't otherwise have a reason to list their home on an airbnb, perhaps because their town isn't really a tourist destination. just their homes, single rooms, patches of grass, recreational vehicle and people are trying to get everything out there possible. they're posting a sweepstakes contest linked to the eclipse. olivia: patches of grass have been very popular. -- going going up t for $150. in some one motel 6
towns, that is going for about $330 a night. and airbnb is costing an average of about $120 a night. and thethese people smaller towns are seeing an opportunity to make a little bit of money and show off their town. olivia zaleski will be watching the partial eclipse through her glasses. these are courtesy of google. a lot of laces that seldom are sold out. put them on. >> you keep making the puppies on. >> because i like it. >> total eclipse of the heart singer bonnie tyler will be singing on a cruise that is on the path of totality. ♪
we are live at bloomberg world headquarters in new york. here are the top stories we are covering on the bloomberg and around the world. the latest developments in the terror attack in barcelona. at least 13 people are dead and dozens were injured after a fan out into a crowd at one of the van plowed into a crowd at one of the city's most popular tourist districts. inflation is not the only thing economists are watching. the future of leadership at the central bank could affect monetary policy. and bill akin's comeback call is on shaky ground right now. we are one hour from the close of trading. let's get a check on markets with taylor riggs. it looks like we are hovering
around the lows of the session. >> we are. losses around 1.1%. airlines index is down about 3.4%. as julie was mentioning, headlines from barcelona confirming that it was indeed a terrorist attack. i want to look at some of the travel stocks. i will highlight united to start. down almost 3%, having its lowest day since november. we have been noting a few key statistics. spain's economy does come from the travel sector. there are some other fundamentals going on when it comes to some of these airline stocks. morgan stanley this morning lowered their price target and earnings per share on average. that guidance for 2018 by about higheron revenue and fuel costs.
perhaps the accommodation of all of those weighing on travel stocks. another big story we are watching his earnings. i am going to touch on cisco. it is down 4.4%. they are continuing to shift from hardware to be a software company. revenue is a little bit lower. you take out the cost of goods sold and you have a gross margin of 64%, missed on estimates on that. the memory chip is getting pretty pricey. the bargaining power of suppliers is weighing in on costs. analysts at callan and piper jaffe see a yield of 3.6% as good. better than microsoft and oracle. overseas they have net cash. if we ever get tax reform in the u.s., we will see how that works out for cisco. finally, we are talking about
earnings season. here andep on over walk you left to right through the chart. quarter season in every over the last five. i will start with the election. every quarter since then, starting to see some gains as we close out earnings season. of course, the election, we had a big rally. , samequarter of 2017 thing. we see a little bit of a jump. same thing with the second quarter and then the third quarter. as we know, it's the long-term that matters. julie: love it. taylor. thank you, it took more than three hours and 100 67 slides, the bill ackman made a presentation on data processing. that the market is too assessed with margins. >> we believe there is so much focus on believing step -- on
achieving steady, upward margins, that we are missing the big picture. so far, investors are not buying his vision. shares slipping to their lowest since july. adp released a response in the past hour saying -- scarlet: joining us now is scott e, who covers activist investing. i read an analysis of bill ackman's presentation, and the just was it was long on problems, short on fixes. >> i don't know if that is entirely true. he went through a very detailed, three and a half hour presentation. essentially, what he said was this is a payroll company that has tacked on technology. through acquisition. and they haven't actually
integrated those into one platform in infrastructure. the suggestion is perhaps that is the way forward. scarlet: one thing that struck me that i think has been perhaps , youed out in your stories can look at the performance chart of the company under the current eeo, carlos rodriguez. 19% total return -- ceo, carlos rodriguez. 19% total return since 2011. >> activists are going into companies like procter & gamble, which is essentially a good company, and the argument they are making is yes, this is a good company, but it could be a better company. so, as bill ackman said today, he said the company is actually $255 a share, not the $105 it is trading at today. julie: and the reaction is shares are falling. immediate reaction, investors
are not buying what he is selling. also, he is getting criticism from his peers. to get thathe tends criticism. he has a combative relationship with some on wall street. has comeanybody who out on his side, whether other folks on wall street or analyst who say, you know, he is right about what we should be doing? vercorp core put out --e co put outnote -- ever ar note saying hep might be right. generally, the consensus is there is room for improvement. i am saying there is some kind of consensus that perhaps margins could make that possible. scarlet: having said that, you whoed someone in your story said his presentation makes its how my keyword short the stock. >> he has created a problem and now -- makes it sound like he
would short the stock. >> he has created a problem and now he needs to create a fix. that: he still has money he is managing that is outside money. >> i guess he needs a win here. that is clear. he lost $4 billion, but he needs a win here, and that's important. i think the stock reacted in the way it did today because they are not entirely convinced this is the way forward or that he can impact the company in the way he wants to. he definitely needs a win on this one. scarlet: it seems like he has a long time frame, doubling the stock price in four years. two activists have -- do activists have that much patience? >> the initial investment was .ade in the fall of 2011 proxy was in 2012.
the turnaround took quite a lot of time. we are not talking quick fixes. he is not talking about levering the company or something like this. this is a dramatic transformation of the way the company works. julie: he brought up canadian pacific. there was skepticism about that working out.up when you look at his historical activist campaign, what management initially resisted and then came around -- adp management has been very vocal and derogatory when describing him. >> any time someone tells you you are doing a bad job, you are going to be hostile. of adprodriguez, the ceo went on nbc and called him a spoiled brat and a used car salesman. , he told himenes he thought maybe he needed to be replaced.
last week, he went on tv and started berating him. now he says it is time for a new ceo. i think it's true that obviously someone doesn't want to have somebody come in and tell them they are doing a bad job. that's a pretty normal reaction for anybody, i would think. julie: fair enough. nobody likes to be insulted. appreciate it. let's get a check on headlines with mark crumpton. mark: thank you. authorities in barcelona now say 13 people are dead, more than 50 others injured after today's van attack on pedestrians in the historic las ramblas district. president trump condemned the and during atter, news conference with visiting japanese officials, secretary of state rex tillerson said the u.s. is ready to help spain in any way necessary. around the world
should know that the united states and our allies are resolved to find you and bring you to justice. spain, authorities are looking for a second suspect. officials have closed roads leading out of barcelona. top economicmp's adviser will stay in his position of according to a white house official. -- garyn was set to be upset overid to be the president's remarks about charlottesville, virginia. speaker paulwants ryan to join democrats in supporting legislation to remove confederate statues. new jersey democratic senator cory booker said he will sponsor legislation to have them removed. russia warns that a military response to tensions on the korean peninsula will lead to "a
colossal tragedy." the foreign minister said moscow is calling for all parties to show restraint. he said any attempt at a military solution will lead to huge cashel tees humanitarian, economic, and environmental huge casualties humanitarian, economic, and environmental catastrophe. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. . am mark crumpton this is bloomberg. ♪ we will hearng up, from former fed governor randy crawford. ♪
senator bob corker has become the first senior gop senator to question confidence in donald trump. corker is a senator from tennessee. a video posted to facebook, the tosident has not yet unable demonstrate the stability or confidence he needs to demonstrate in order to be successful and we need him to be all. there certainly -- to be successful. there certainly have been other senators and members of congress who have talked about trump positions and behavior. although, most of those who commented on his recent reaction to charlottesville did not call out the president specifically, but spoken more general terms about the need to combat racism and to be more tolerant. scarlet: exactly. this is the first time we have seen a senator of this standing donald trump specifically and question his competence. we will keep you posted on any
further headlines. is the on uncertainties next policy move from the fed. inflation is in retreat. committee members are keeping the door open on the timing of balance sheet reductions. we spoke to a university of theago professor and asked former fed governor whether the fed will be forced to change its timetable. >> i think they are still likely to announce something on the timing of the balance sheet reduction. i think they want to do that. i think there is a reasonable chance they could delay beyond september because inflation has been running lower than they had asked acted, so revenue continued to move up toward the , so revenuepected continued to move up toward the 2% goal. that is true in the u.s. and other countries. >> i don't think we can make too much about the fact that these minutes seem to ask
more questions than they answered. are they facing a crisis of confidence? crisis ofn't say confidence, but they are much less certain they are on a path to the 2% inflation goal. butad a few rate increases, i think there is a little more wariness, and now they are also going to start the reduction of the balance sheet. i think they probably will be a little bit cautious because they are afraid of the one-two punch that could move things more than they expect. >> we keep talking about the phillips curve and why wage growth is not responding to low unemployment. fact that inflation is there but the fed is looking at the wrong thing? >> i think it's hard to see a lot of inflation whether you differentges,
measures of inflation, i just don't see it being there. i don't think it's a measurement problem they're having. i think it's just a bit of a surprise because there has been so little inflation that has been the tradition. that is one of the things they need to come to grips with. >> if we can also just get your reaction to some tweets we have seen. i will read you some of them. i believe we have a graphic. that president trump should reappoint janet yellen to he also says, but i am lucky enough to know janet yellen well, and i know that her vision for america is highly to from that of trumps -- that of trump. chair job fromed him would send a signal that she would regret and possibly deeply.
do you agree? the first part. i know janet yellen well also. wasrked with her when she the head of the san francisco fed during the financial crisis. i have deep respect for janet yellen. we just really don't know, going forward, exactly what will happen. ad i think the fed has reasonable amount of independence from the white house, so i would hope that the fed can maintain that, and whoever might be the fed chair can operate reasonably independently of the administration, as has been the tradition for the fed's history. one person in the leadership committee said a rate hike would strike an appropriate balance. is this unusual? it sounds like it could be the fed chair or her haps emmy fisher -- perhaps stanley
fischer. >> i think it will depend on how the economy involved -- evolves. financial uncertainty and political uncertainty. the u.s. economy seems to move along at about 2% no matter what happens. we have had a lot of shocks, and we will have to see what happens with inflation. we expected inflation to be moving up more than it is. to gocontinues to start down, that will probably delay the next hike. >> is the curve broken? certainly, the president thinks it's going to work. to keepwe are going creating jobs and wages are going to increase. are they? they haven't until now. >> jackson hole meeting is coming up next week. wasle of years ago, that the big question, is the phillips curve broken or are we going to go back to our normal relationship?
unfortunately, we didn't get a definitive answer. notes, see that in the in the minutes. wehink one of the reasons haven't seen inflation move up is that the broader picture of unemployment is that it's been so much higher than typical. now the traditional measures and the broader measures, that include people who are part-time but want to be full-time, people who haven't looked for a job but do want to look for a job, that spread is going to come down. we are going to see that spread come down moving forward, but not as much as we have in the past. julie: we have more to balance in this breaking news from spain. two suspects have now been -- we have more developments in this breaking news from spain. two suspects have now been arrested in the attack that left 13 people dead. spain have called the incident a terror attack and now
this is "bloomberg markets," i'm scarlet fu. for today'sng me action insight, steve, i want to talk about a chart i brought up earlier today on bloomberg. the s&p 500 is falling today. more people are buying protection. calle looking at the put ratio for the s&p 500. the higher it gets, the more people are buying downside protection. the yellow line is the index itself. it has a spike we have seen
before. it still continues to go up. i wonder if there is any predictive power at all in looking at the put call ratio. >> i think the put call ratio is informative, but not necessarily protective. there are certain times you can look at it and go wow, the put call ratio made a great call on the market. noother times, it has bearings on things. however, the chart you showed was very instructive in terms of are seeing in the market. a lot of times, heavy put activity is more speculative. times, people might be using puts to protect larger ,ieces of the portfolio significant stock holdings or the outright portfolio itself. do you think that's a strategy that makes sense? >> i am a believer in keeping one eye on hedging. todayis a relentlessness,
notwithstanding, and the low volatility levels, i think, is not a prudent strategy. we have seen that with some of the large trades you highlighted. those are probably large institutions hedging significant pieces of their portfolio, not necessarily speculating on the downside. brought up, and you a potential strategy today as a way of doing that. talk to me about this trade and why it is a good way to hedge. >> the way the trade works is -- this is for someone who was a little worried that in the next month or so when there is a lot events coming down the pipe, if you are worried about a 10% correction, what do you do? you don't necessarily take 10% where you get to a point
it is worthless. you want a little more protection. case, let's say 5% down, that skew is getting very high. the applied volatility is maybe five clicks higher than the money volatility. thee go further out of money put, more toward what your downside would he. that puts a lid on your downside, but if you're not looking to be speculative, if you are looking to hedge, this is the type of structure someone would use. you defray the costs. julie: thank you so much. scarlet? ahead, another retailer will have its moment of truth. progress on the gap turnaround plan. we have a full report. ♪
why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. crumpton. mark it is time for first word news. officials say a second suspect has been arrested in today's deadly van attack on pedestrians in barcelona's historic district.
today's attack, which killed 13 and injured more than 50, is being treated as an act of terror. president trump has condemned the incident on twitter, saying the u.s. will do "whatever is necessary" to help. tennessee republican senator bob corker has delivered his harshest criticism yet of president trump, telling reporters in chattanooga today that the president has not shown the confidence needed to lead the nation. senator corker warned that the nation is "going to go through great peril and that there needs to be some radical changes at the white house." separately, republican senator tim scott of south carolina tells vice news that president trump's mall authority is compromised. the white house as it is working to find a convenient time for the president to speak with a family of the 32-year-old woman who was killed while protesting that white nationalists rally last weekend in charlottesville, virginia. spokeswoman lindsay